Caterpillar, Peoria, Ill., reported a second-quarter profit of $1.09 per share, an increase of $0.49 per share from a profit of $0.60 per share in the second quarter of last year. Profit of $707 million was 91 percent higher than second-quarter 2009 profit of $371 million. Sales and revenues of $10.409 billion were up 31 percent from $7.975 billion in the second quarter of last year.

“We’ve been highly focused on three things this year — significantly increasing production in response to higher demand from our customers, particularly in developing economies, aggressively managing costs and driving better cash flow,” said Doug Oberhelman, Caterpillar CEO. “You can see the results in our second quarter — sales and revenues increased substantially, operating profit as a percent of sales more than doubled, and Machinery and Engines operating cash flow and our debt-to-capital ratio strengthened. Our employees, dealers and suppliers are doing a great job ramping up to support customers. The increase in our sales from first to second quarter 2010 was one of the most significant quarter-to-quarter increases in our history,” Oberhelman said.

Sales and revenues were up $2.434 billion from the second quarter of 2009. Sales volume improved $2.259 billion, price realization was favorable $187 million, and the impact of currency added $23 million. Financial Products revenues were down $35 million. Profit was up $336 million from the second quarter of 2009. The increase was primarily the result of higher sales volume, improved operating efficiencies and favorable price realization, partially offset by higher taxes, provisions for incentive compensation and the absence of $110 million of LIFO inventory decrement benefits from the second quarter of 2009.

The company is improving its outlook for 2010 by raising the sales and revenues range and increasing profit expectations. Sales and revenues are now expected to be in a range of $39 to $42 billion, with a midpoint of $40.5 billion. The increased 2010 profit outlook is a range of $3.15 to $3.85 per share, with a midpoint of $3.50 per share. The previous sales and revenues outlook was a range of $38 to $42 billion, and the previous profit outlook range was $2.50 to $3.25 per share.

“We’re very pleased to increase our outlook for 2010. It reflects an increase in sales and revenues and a more significant increase in profit — a result of our continuing focus on cost management and profit improvement,” Oberhelman said. “While there are significant economic concerns around the world that we are watching closely, orders have continued to outpace our shipments and we expect to increase production in the second half of the year,” Oberhelman said. “We continue to be very positive about the longer-term prospects for many of the industries we serve — like mining, energy, infrastructure, electric power and rail. This year we have made several announcements related to increasing capacity and expanding our lineup of products and services,” he said.

The strategic initiatives announced include:

• A new excavator facility to increase production capacity in the United States.
• An agreement to acquire Electro-Motive Diesel (EMD), which has the largest installed base of diesel-electric locomotives in the world, for $820 million.
• A multi-year investment of nearly $700 million supporting mining customers, including a full line of mining shovels and capacity expansion for mining trucks made in the United States and India.
• A 400-percent increase in excavator production capacity over the next several years in Xuzhou, China.
• A new facility for small wheel loader and backhoe loader manufacturing in Brazil.

“We expect these investments will position the company for continued global leadership and growth,” Oberhelman said.